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    Another surprise: July homebuilding permits take dip as Valley market cools

    Single-family homebuilding permits in July dipped a bit compared with July 2020, an indication the Valley’s housing market cooled a bit over the summer. Nonetheless, overall permits are up 32% year to date through July, with some Phoenix metro cities seeing triple-digit percentage increases.

    Between January and July, Valley municipalities issued 20,131 single-family homebuilding permits to homebuilders, up 32% from 15,248 during the same period in 2020, according to the Home Builders Association of Central Arizona.

    Yet July permits were down 7% from July 2020, new home closings in July also were down by 18% from July 2020, according to a new housing report issued by RL Brown Housing Report.

    Nationwide, Census data issued on Aug. 18 found housing starts were down 7% from June to July, but up 2.5% from July 2020, to 1.534 million.

    Supply constraints

    Homebuilders are having a difficult time overcoming the enduring constraints posed by the global supply shortage, said Matthew Speakman, a Zillow economist.

    Limited access to key building supplies has upped prices for materials and translated to higher list prices for would-be homebuyers not only nationwide, but also in Phoenix, he said.

    “Home shoppers remain eager and demand for housing remains strong in Phoenix, due to a wave of millennials reaching peak homebuying years with folks moving to the area seeking sun and/or encouraged by more flexible work-from-home opportunities,” Speakman said.

    “But sticker shock may also have prevented some shoppers from committing to a purchase,” he said. “The supply backlog has also limited homebuilders’ ability to confidently pencil out the finances surrounding potential projects — a significant constraint for the typically risk-averse industry.”

    While inventory pressures are softening, the number of homes available for sale remains well below where they were this time last year, he aid.

    “A rapid increase in for-sale inventory will be constrained by the challenges faced by builders,” he said.

    Valley cities with the biggest jump in homebuilding permits (Year to date between January and July)


    YOY increase: 258%

    YTD 2021: 458

    YTD 2020: 128


    YOY increase: 237%

    YTD 2021: 1,270

    YTD 2020: 535

    Casa Grande

    YOY increase: 95%

    YTD 2021: 1,084

    YTD 2020: 557


    YOY increase: 77%

    YTD 2021: 1,015

    YTD 2020: 572


    YOY increase: 76%

    YTD 2021: 416

    YTD 2020: 236

    * Coolidge April and May 2020 estimated

    Source: Home Builders Association of Central Arizona

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